Severing Ties When a Corporate Partnership Goes Awry

As with personal unions that dissolve due to irreconcilable differences, a permanent, official breaking off of relations is usually the only recourse when a corporate partnership with a cause or charity turns out to be less than idyllic. We’re not equating the pain felt by a married couple in the throes of a divorce with that of a soured philanthropic relationship but, still, the costs can be devastating to a company if the breakup is accompanied by negative PR.

Take Intel: When the software company partnered with the nonprofit One Laptop Per Child last year in a campaign to get inexpensive laptops into the hands of poor children in countries like Uruguay, Peru and Mexico, the match appeared to be troubled from the very beginning. For starters, One Laptop’s XO computers, which are equipped with processors built by an Intel rival (Advanced Micro Devices), had long been the target of Intel’s criticism. Joining forces, albeit for a good cause, would subject the company to risks that could potentially do serious damage to its reputation—not to mention impede efforts to compete in a region it had long hoped to develop. Regardless, Intel execs joined the board of One Laptop Per Child in the summer of 2007, agreeing to donate $18 million and develop an Intel-based version of the XO computer.

Unfortunately, it didn’t take long for the cracks to show. Intel sales reps soon began competing actively against the One Laptop computers (which cost $200 apiece) by trying to sell a more expensive rival computer, the Classmate PC.
That, coupled with another sales move that conflicted with the interests of the partnership, resulted in Intel executives’ decision to immediately sever ties. Thus, what started as a goodwill initiative with the best intentions quickly deteriorated and received widespread coverage for all the wrong reasons.

So, what’s going on in the current business environment that’s wrecking such well-intentioned partnerships? “The real problem seems to be the change in attitude with not-for-profits,” says John Rosica, founder of Rosica Strategic Public Relations and himself a pioneer in the field of cause marketing (he and Wally Amos of Famous Amos cookies fame created a tie-in with the Literacy Volunteers of America three decades ago, which raised awareness of adult illiteracy). “There’s a certain arrogance that didn’t exist when we started doing this.”

Recently, Rosica attempted to pair S & H Greenpoints, whose green stamps have been “revisited and reborn” as an online rewards currency program, with a nonprofit that specializes in urban renewal and development. The potential partnership soon crumbled.“The Greenpoints people came to me and said, ‘We want to help establish ourselves, and we want to give away $50,000 worth of furniture from our catalog,’” recalls Rosica. “We got on the phone with the marketing director [of the nonprofit], who only gave us grief and said, ‘Is that all?’”

Taken aback by the marketing director’s supercilious attitude, Rosica cut the conversation short. “I told her, ‘I’m not sure we should be talking.’ I have a temper and bit my tongue. Because of her arrogance, she was able to kill this project and deprive new homeowners of having their homes reupholstered with new furnishings.”

Both Rosica and Intel’s experiences with matches made in hell underscore a serious problem many communications professionals will face (if they haven’t already) as the frequency of corporate partnerships rises to meet demands of the public’s growing concern with philanthropy and corporate responsibility. That is, how do you sever ties with the second party without putting your own reputation at risk?

“The idea is not to disempower the person you’re talking to,” says Kristian Darigan, vice president of cause branding for Cone Inc., “but you need to protect your interests. Let them know that further outreach around the foundation or community affairs is potentially detrimental.”

Sometimes, though, the fault lies not with the nonprofits but with companies, which, due to external or internal changes, are no longer equipped or strategically aligned to support relationships that have been “grandfathered over time,” Darigan says.

In this case, she says it’s important to apply a “migration strategy” that will lay the foundation for the severing of the relationship while minimizing possible reputation damage.
The three stages of this migration strategy:

1. You’ve got mail. “Firstly, inform the change via a letter to the nonprofit. Tell them what causes your company is going to be interested in supporting in the future,” Darigan says. A formal notification sets the stage for what is to come.

2. Redirect focus. “Reach out to those nonprofits that have the ability to change their focus to fit yours.” This will help you transition from attention generated by a negative relationship’s dissolution to more positive news about future initiatives with other nonprofit organizations.

3. Get aligned. “The ‘alignment period’ is when you’re not longer giving or supporting. That’s where you have these difficult discussions. In those situations, the best thing to do is to have honest conversations with your executive team so they know the direction you’re taking in terms of strategy and the types of partnership you’re seeking to have with [future] nonprofits so they’re on board with you.”

For Rosica, a best practice is easing out of the partnership without confrontation, as engaging in hostility or recrimination is counterproductive. “It doesn’t do anyone justice,” he says. “It doesn’t serve us or them, [nor does it] change their ways. That’s what we’ve done when we’ve had a challenge.”

Maintaining a channel of honest and clear communications at all times is critical when partnerships hit a rough patch. Expectations should be spelled out at the beginning of a relationship to prevent a souring on the level of the failed Intel/One Laptop Per Child pairing. “You want to avoid that type of situation as a company and nonprofit,” Darigan says. “It also sends a message to nonprofits that as a partner there may be areas you want to exercise caution.”

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